Re: West loses major copyright decision

RE: COMPULSORY LICENSING, DATABASE PROTECTION, AND THE ILLUSION OF THE POTENTIAL OF RELIEF FROM CHILLINGLY OVERBROAD DATABASE PROTECTION BY EITHER COMPULSORY LICENSING OR LITIGATION. James Love and John Noble on another thread [Helping Developing Countries with IP issues] are discussing compulsory licensing of patents and copyrights. In this thread, there is discussion of the database protection laws in Europe and I thought it would be useful to illustrate what happens when certain elements of the information industry attempt to import European law in a partial manner as it regards compulsory licensing and Mr. Bing's cavalier suggestion that litigation will somehow protect one from abusive database claims.

On April 6, 1995, a couple of interesting events occurred. First, from what I can tell, the European case that caused great concern to the database protectors was the Magill case. Although Magill supported database like protection to TV listings, at the same time it required compulsory licensing of the TV listings. This decision was appealed to the EEC High Court and the appeals denied on April 6, 1995. The lower court case had caused great consternation among some intellectual property owners and some intellectual property lawyer and professors in Europe, and the US based Intellectual Property Organization was one of the appellants.

Simultaneously, on that same day April 6, 1995 [note the 6 hour time difference], the DOJ Antitrust Division finally released its guidelines on Antitrust Licensing, and, made clear, it seems to me, its distaste for compulsory licensing as shown in the excerpt below [April 6, 1995 was also just a few days after Joel Klein officially completed his move from the White House to the Antitrust Division.] [Interestingly as well, only a month earlier, West was defeated in its attempt to sneak in a database protection provision in the Paperwork Reduction Act. See The Hill article on the HyperLaw Web site.]

Then, six months later, Representative Moorehead, a recipient of West campaign contributions, introduced the database protection bill, and specifically excluded from the bill compulsory licensing. Representative Hyde's comments on the introduction of the bill stated:

"Our bill would eliminate a court-created presumption that market power is always present in a technical antitrust sense when a product protected by an intellectual property right is sold, licensed, or otherwise transferred. The market power presumption is wrong because it is based on false assumptions. Because there are often substitutes for products covered by intellectual property rights or there is no demand for the protected product, an intellectual property right does not automatically confer the power to determine the overall market price of a product or the power to exclude competitors from the marketplace."

I am also told that the original version of the database protection treaty last year included provisions related to compulsory licensing but these were taken out. Can someone confirm this?

Finally, I would emphatically argue that the citation license "negotiated" by the DOJ last year as part of the West-Thomson merger shows exactly what is wrong with assuming that compulsory licensing provisions provide an adequate escape valve for overbroad database protection or copyright protections. The license is virtually useless not only because of its many restrictions, but also because it provided a license to paginate blank pages. That is why the latest West loss on its claim to the copyright of text is significant, and doubly so, because the DOJ specifically refused to file an amicus brief in support of HyperLaw's challenge to the text of court opinions, although it did do so in support of the challenge to West's citation copyrights.

This is not to say that there should not be statutory protections re compulsory licensing, but that the compulsory licensing should not be an excuse for overbroad and vague and lazy drafting -- and, indeed, the hostility in the US toward compulsory licensing argues that this remedy would be of little meaning.

Similarly, I believe that Mr. Bing's similar prescription to remedy the overbroad nature of the database protection provisions, that being litigation, is completely impractical. The first thing the Mr. Bing needs to appreciate is that there are constitutional standing provisions which limit the ability of those challenging holders of copyrights, patents and trademarks. One must show a case or controversy. The Matthew Bender and HyperLaw cases were filed in February and March of 1994 and West used the standing defense to hold of the challenge until 1996 when the merits were finally reached, and, I note that Matthew Bender has filed for attorney's fees, much of it related to the standing challenge, of 1.2 million dollars, which is indeed a modest sum concerning what happened, and, the HyperLaw had to meet an even greater West assault, and there are appeals that will continue for another couple of years -- perhaps we could impose a tax on all databases asserting database protection to establish a litigation fund for challengers of those claims. So, I just do not see that litigation to curb expansive database protection claims is realistic, and is in any way curative of the chilling effect that database protection claims from giants like Reed Elsevier and Thomson will have on everyone else (whilst those two companies enter into the equivalent of patent pools through cross-licensing, something else in which the Antitrust Division see little evil.) Who on this list believes that a US Database Protection Act, in order to make it easier to challenge database claimes, could bestow jurisdiction on the courts in the absence of a case or controversy, and that such a jurisdictional provision would withstand challenge given the makeup of our present Supreme Court?

Finally, from all that I can tell, were the database protection proposals to exclude protection for databases of court opinions, regulations, and statutes, I think that one would find that industry fervor would readily diminish. And, if one added to that databases of telephone listings prepared by the original telephone company, then, fervor would disappear.

The documents referred may be found on HyperLaw's Web page - - http://www.hyperlaw.com/dbpage.htm. Following are a couple of excerpts:

ADS

1. ANTITRUST GUIDELINES FOR THE LICENSING OF INTELLECTUAL PROPERTY United States Department of Justice, Antitrust Division, APRIL 6, 1995.

   Market power is the ability profitably to maintain prices above, or output below, competitive levels for a significant period of time.[9] The Agencies will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner. Although the intellectual property right confers the power to exclude with respect to the specific product, process, or work in question, there will often be sufficient actual or potential close substitutes for such product, process, or work to prevent the exercise of market power.[10] If a patent or other form of intellectual property does confer market power, that market power does not by itself offend the antitrust laws. As with any other tangible or intangible asset that enables its owner to obtain significant supracompetitive profits, market power (or even a monopoly) that is solely "a consequence of a superior product, business acumen, or historic accident" does not violate the antitrust laws.[11] Nor does such market power impose on the intellectual property owner an obligation to license the use of that property to others. As in other antitrust contexts, however, market power could be illegally acquired or maintained, or, even if lawfully acquired and maintained, would be relevant to the ability of an intellectual property owner to harm competition through unreasonable conduct in connection with such property.

2. The following is an excerpt from HyperLaw's Web Page concerning the 1995 version of the database protection bill:

<a href="http://thomas.loc.gov/cgi-bin/query/z?c104:H.R.2674::"> H.R. 2674. Intellectual Property Antitrust Protection Act of 1995 - November 25, 1996</a>

Under H.R. 2674, a court in the United States could not do what the EEC Court did in Magill. In other words, while Moorhead was proposing the Database Protection Act, at the same time Representative Moorhead was proposing a bill to take away the remedies available in European law for abuse of the copyright monopoly.

"Comments of Rep. Hyde (on behalf of Rep. Moorhead and others) on Introduction of H.R. 2674. Intellectual Property Antitrust Protection Act of 1995:

Our bill would eliminate a court-created presumption that market power is always present in a technical antitrust sense when a product protected by an intellectual property right is sold, licensed, or otherwise transferred. The market power presumption is wrong because it is based on false assumptions. Because there are often substitutes for products covered by intellectual property rights or there is no demand for the protected product, an intellectual property right does not automatically confer the power to determine the overall market price of a product or the power to exclude competitors from the marketplace.

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:: Alan D. Sugarman       Federal Appeals on Disc tm CD-ROM  ::

:: President              Opinions of US Courts of Appeals   ::

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